Interior Designer Insurance: Coverage, Cost, & Providers

The interior designer insurance policy is a business owner’s plan (BOP). It provides affordable coverage for personal injury and property damage, with annual costs of $1,500. Professional liability coverage is also recommended for interior designers. It has a minimum cost of $1,200 per annum and can be combined with commercial auto insurance, which ranges from $1,000 to $4,000.

The Hartford, a highly regarded company, offers insurance specifically designed to meet the needs of interior decorators and designers. The Hartford can help you bundle coverages into a BOP to get the best coverage for your small business. Get a quote from The Hartford in just a few clicks.

The Hartford

How Interior Designer Insurance Works

Interior designers cannot buy just one policy to provide all their needs. They can combine multiple essential policies into one BOP. BOPs are often offered by insurance companies that allow you to add on additional coverages like professional liability and commercial auto insurance. This allows interior designers to have comprehensive protection under one policy.

Bundled coverage can be convenient and save you money in many cases. Interior designers need to choose the right provider to provide the protection they require for various risks. They could be sued, and their office, vehicle, or property may suffer damage.

Interior Designer Insurance: What is the Cost?

Interior decorators and designers insurance costs will vary depending on what coverage you require. The average annual cost of a BOP is $500 to $2,500 for $1,000,000 in coverage, while professional liability policies run around $1,200 for $1,000,000 in protection. The cost of commercial auto insurance is between $1,000 and $4500 annually.

Insurance Type Annual Premium Cost Deductible
BOP From $500 to $2,500 From $0 to $500
Professional Liability Insurance From $1,200 to $2,500 From $500 to $1,000
Commercial Auto Insurance From $1,000 to $4,500 $500
Workers’ Complement $550 – $3,000 $0
Cyber Liability Insurance $600 – $4,000 $0

There are many factors that affect how much you pay for insurance coverage.

  • Your credibility, years of industry experience: Professional Liability coverage is less expensive if you are an experienced interior designer without any history of claims. You can expect to pay higher if you are just starting out, or if you have been sued in the past.
  • The number or vehicles of employees you are insuring. Workers’ Compensation coverage is more expensive for those with more workers, while commercial auto insurance can be more expensive for those with multiple or more expensive vehicles.
  • The property’s value: If your design studio is very expensive and contains antique furnishings, you will need more protection for property damage. To get more protection, you will need to pay higher premiums.

 

Tip – Because you may need multiple types of insurance coverage you will be charged more if you have them from different companies. It is best to get insurance that meets all your needs. Bundled coverage is a way to get insurance at a lower price. This will not only save you money but also make it easier to file a claim.

 

Types of insurance for interior designers and decorators

Designers have two protections: protection against property damage and protection against lawsuits. Workers’ compensation coverage is often required because many designers employ employees. Designers can be protected while they travel to clients or stores with commercial auto insurance. Professional liability coverage covers a designer in the event of a lawsuit.

The Most Popular Types of Insurance For Interior Designers and Decorators

Types of Insurance What Does It Cover
BOP General liability and property damage
Professional Liability Insurance Professional failures can lead to professional liability
Commercial Auto Insurance Work vehicle accidents can cause damage or even lawsuits.
Workers’ Comp Insurance Workers in a design company can be injured

BOP

BOP policy is a must-have for every designer. This policy provides two types of coverage: general liability coverage as well as property damage coverage.

The following scenarios are covered by a BOP:

  • A BOP includes commercial general coverage to protect a designer who has a client slip and fall in the studio. It covers any lawsuits that may arise from injuries or property damage caused by the designer.
  • Property damage coverage covers the cost of both the repair and replacement of furniture damaged by fires in the design studio.

Designers are at least somewhat vulnerable to someone getting hurt on their premises. A BOP is an essential purchase for most designers.

Professional Liability Insurance

Interior designers provide professional services. The Bureau of Labor Statistics lists states that have licensed interior designers to advertise their services.

If you offer bad advice and recommend a floor that is easily damaged and are sued by the homeowner, a professional negligence insurance policy would pay the legal fees.

Designers could be sued

  • Overbudget projects
  • Advice that doesn’t work
  • Additional costs can be incurred due to mistakes in measurement
  • Failure to finish a project within budget or time

Professional liability insurance is also known as errors and omissions coverage. It pays for legal defense costs, and any settlements or judgments that result from professional misconduct lawsuits. This insurance protects professionals who make mistakes or are negligent in providing expert advice to clients. This coverage will protect interior designers from potential lawsuits and help them to pay their defense costs.

 

Tip – Insurance companies consider the possibility of a claim. A long-standing track record of success as an interior designer can increase your chances of getting the best coverage. Professional liability insurance can be affordable if you have at least three years’ experience.

 

Commercial Auto Insurance

Your personal auto insurance may not cover you if you drive personal or business vehicles to clients’ houses. This is because commercial driving policy exclusions can apply. To protect yourself and your property, you will need commercial insurance.

Designers and decorators frequently drive to clients’ homes to look at samples or furniture and view spaces that need decorating. Sometimes, they may transport furniture or materials to clients’ homes. Designers are at risk of an accident while driving. Commercial auto insurance covers damage to cars and legal costs resulting from collisions.

Commercial auto insurance is not necessary if you don’t drive for work or if no one in your company has a work car. If you drive for work, however, you shouldn’t be left uninsured or rely on your auto insurance.

Workers’ Compensation Insurance

Designers might employ support staff such as a receptionist or movers to transport furniture and materials. Workers’ compensation insurance is required for those who work for you.

Workers’ compensation insurance provides protection for you and your employees, providing disability and medical benefits in the case of an injury at work. You may also need to have coverage. States have different rules and require you to purchase a policy. However, some states won’t require you to buy workers’ compensation insurance if you don’t employ multiple workers.

Workers’ compensation is not required if you do not have employees. If you have employees and you have incorporated your company, you might need workers’ compensation coverage if the state law requires it.

There are other types of insurance for interior designers

You might consider cyber-liability insurance if you store client records on your computer, or use expensive software in your design process. You are protected from any lawsuits if there is a data breach. The cost of cyber liability insurance for interior designers is between $1,000 and $7500 per year.

If you are responsible for overseeing projects and also provide advice on interior design, consider contractor’s insurance. Connecticut, for example, requires contractor’s insurance for large contractors who work on commercial, residential, or industrial projects. It is important to note that contractor insurance can be expensive. Builder’s risk insurance could cost you anywhere from 1% – 4% of project costs.

Top Interior Design Insurance Providers

Provider Best for
The Hartford Bundled coverage offers convenience and cost efficiency
Hiscox Interior designers needing specialized liability insurance that is fast and affordable
ASID Insurance Get affordable coverage with the only policy that is specifically tailored for interior designers
Veracity In-house underwriting allows for quick approval of design firms of any size
Insurance Interior design companies that are small need to get quotes in under 15 minutes

The Hartford

The Hartford, one of the most reputable insurance companies in the country, offers policies across all 50 states. The Hartford is known for its ability to innovate and create policies that are affordable, but also offer more coverage options than other insurance providers.

It is unique that The Hartford makes purchasing bundle coverage easy with its Spectrum Business Owners’ policy. Interior designers can enjoy a wide range of optional coverage through The Hartford’s Spectrum Owners’ Policy. You will also have the option to increase your tier within the Spectrum options, which is sometimes referred to as your Stretch level.

Hiscox

Hiscox is a specialist in small business insurance and understands the risks that clients, such as interior designers, face. Hiscox can create customized policies that meet specific coverage requirements. Interior designers can also pay their annual premiums monthly at no extra charge. After completing a short, no-obligation application, you can get a quote online.

ASID Insurance

The American Society of Interior Designers (ASID) is the best at understanding the needs of interior designers. ASID and The Insurance Exchange have teamed up to develop insurance products that protect their members. ASID Insurance will provide you with the best industry professionals and unbeatable products.

Veracity

Veracity can be a great option if you have a small or large design company that requires coverage. You also want to get it approved as quickly as possible. Veracity is a binding authority with top-rated insurers. Its unique in-house underwriting means you can get coverage faster and still have the option to shop around.

Insurance

Insureon focuses on small businesses. It is ideal for interior design firms that need to get as many quotes as possible. Insureon is quick and easy to use. You can fill out one application and get multiple quotes from different providers in just 10 minutes. A small-business agent can help you choose the right policy for you.

Bottom line

Although interior design may seem like a low-risk occupation, it can lead to significant financial loss if you don’t have enough coverage. Bundled coverage is a way to ensure your business is protected in the event of a disaster.

What is the difference between Additional Insured and Loss Payee?

Additional insured coverage and loss payee coverage can extend insurance coverage beyond the insured. Contractual agreements often allow for third-party coverage. A loss payee is different from an additional insured in that they can collect payments from the insurer.

The general liability policy does not cover , but neither the loss payee nor the additional insured can change the coverage. They just change who is covered and who is paid out in a claim.

What is an Additional Insured?

Additional insured refers to a person or entity that is exposed due to your business operations. It is covered by your insurance policy as an extension of your coverage. The additional insured is listed on your insurance policy’s declarations page. Although listed, it is not considered a named insured and does not have the right to make any changes or receive checks for claims payments.

Example of an Additional Insured

The lease contract for commercial property will specify the amount of insurance that you must have and the requirement to include the property owner as an additional insured. Your liability is for the property owner in cases such as a slip-and fall accident at your location. However, the property owner requests to be covered by your policy. Your policy protects the building owner if someone sues. This is common in general responsibility or business owner’s insurances (BOPs).

Additional Insured Rights

When an additional insured is named on a business policy, there are certain rights. These rights include:

  • Protection from liability
  • Insurance benefits
  • Only those who have a direct interest in the protection of liability claims are eligible for coverage

The policy is not in the full control of the additional insured. They are not able to change the policy, increase coverage or make cash claims. Their name will not appear on the check if they are not listed on the policy as a loss payer.

How to add an additional insurance

In general, an additional insured is added when requested by a third-party with whom you are contractually engaged. It could be a leasing company that leases your commercial space or another business you are subcontracting or working on a major project.

It is important that you specify when your business would like to be added to another company’s insurance policy. You will need to add your business to their insurance policy if you hire subcontractors or allow someone to use your space for business purposes.

How to add an additional insurance

With a little information about the third person, your insurance carrier may be able to add them as an insured. They will ask for the legal name, address, and telephone number of the third party. If there is a contract number, they will take it. Although most insurance companies don’t charge extra to add additional insureds, it is worth checking with your provider.

What is a Loss Payee and How Does It Work?

An additional insured has more rights than a loss payee. When it comes to property loss, the name insured is not entitled to any claims. This is because the loss payer retains an insurable right in the property, while an additional insured is only mitigating their potential liabilities.

Example of a Loss Payee

A mortgage company that owns commercial property is an example of a loss payer. If the property is damaged or destroyed by fire, the mortgage company will be the most vulnerable. They want to ensure that the funds used to repair or rebuild the property are used in the event of a loss. This is why they have the right to the funds. A frustrated business owner could claim the money and then abandon the property.

Loss Payee Rights

The loss payee is entitled to the first property claim proceeds. However, they do not have complete authority over the policy. They cannot cancel, change or increase coverage. They have the following rights as loss payee:

  • Right to insurance benefits – First right to any proceeds from any property claim for which they have an insurable interests
  • Property protections available to all

 

Insurable Interest A party with an insurable interest can suffer financial loss if there is a claim. This is often seen in property insurance.

 

How to add a loss payee

When you buy or lease commercial property such as machinery, real estate, or heavy equipment, a loss payee may be requested to be included. A bank may request that you assign a loss payer to it if they provide you with a loan, line or credit.

How to add a loss payee

Talk to your insurance company to add a loss payer. They will need to know all details about the party including their legal name and address as well as contact information. The loss payee does not change the underwriting of the policy. However, it is best to verify this with your insurance company.

Bottom line

It is important to have the correct third-party designations in your insurance policy so that everyone is properly protected. The third party will most likely tell you if they should be added insured or loss payer. If they refuse to tell you or request more rights, keep in mind that the loss payer has an insurable right in your property. An additional insured needs to be released from liability.

Dance Instructor Insurance: Coverage, Cost, & Providers

Dance instructors require multiple policies to insure their studios, as there isn’t one policy that covers all of their risks. Instructors can get bundled insurance coverage through a business owner’s plan (BOP), to provide comprehensive protection for the most likely losses. BOPs are $300 per year for dance instructors.

Although landlords may require dance studio owners to have building tenant insurance, they might not need to add any additional policies. They still have exposures in many areas such as employee and student injuries. Clients prefer to work with properly insured businesses. Dance instructors should have a mix of policies to protect them from the most serious risks. Dance studio insurance usually includes general liability, renters, property coverage, workers’ compensation, and general liability.

It doesn’t matter if you run a studio or teach dance, it is crucial to have insurance that covers your interests. The Hartford can help you choose the right coverage for your company with a simple, no-obligation application. You can get the coverage you want and the confidence you need in just a few minutes.

The Hartford

Dance Instructor & Dance Studio Insurance Prices

Instructors may need multiple policies. It is important to add up the cost. If studio owners and dance instructors bundle their coverage, they will get the best deal. BOPs are generally less expensive than purchasing separate liability and business property insurances. They start at about $400 per year.

Costs for insurance on dance studios vary from one state to the next. These are the typical starting costs of policies for policies that are based on a gym measuring 2,000 square feet with one clerk and $100,000 worth of fitness and business equipment.

Dance Instructor & Dance Studio Insurance costs & Deductibles

Types of insurance Average Premium Cost Maximum Coverage Deductible
BOP 400 to 3,500 $1 Million liability + $30,000 Property $500
Professional Liability Policy From $450 to $1.200 $1 Million $500
Workers’ Compensation From $500 to $3,000 $1 Million $500
Commercial Auto Insurance Vehicles from $3,840 to $4,4200 $250,000 $500

There are many factors that can affect the cost of insurance for dance instructors, such as:

  • The property and equipment value: Property insurance costs for dance classes taught at home are lower than those that require expensive equipment in a studio.
  • Your experience: Your professional history in dance and any past claims will have an impact on the cost of your professional liability insurance.
  • Workers: The higher the cost of workers’ compensation, the more employees you have.

Some insurers may not cover you if you offer a wide range of fitness services in your studio, or subcontract to other people who do. Don’t be discouraged: tell your agent what you need so that they can help you find the right policy.

 

Tip – Although bundling multiple policies can often provide the best dance studio insurance rates, it is a good idea to shop around first. To get quotes from small-business insurance companies, you can either work with a broker or browse the internet. Compare different policies premiums, limits, deductibles and other factors to ensure you get the best insurance for your needs at the lowest price.

 

What Dance Studio Insurance Covers

The liability insurance for dance studios covers injuries that result in bodily injury, property damage and financial loss. Professional liability may also be covered by insurance for dance instructors, such as teaching incorrectly a move or causing injury to another person.

Additional policies can be purchased to protect personal and business property, as well as buildings and employees from damage.

Dance studio insurance covers the following areas:

  • Slip-and-fall accidents can cause injuries to clients and consumers.
  • Clients who have items that are damaged or broken may suffer personal property damage
  • Fire, theft, vandalism and other similar events can cause damage to the studio or its physical assets.
  • Dance studio instructors are being sued for allegedly failing to provide adequate professional advice and/or a lack of service that resulted in financial or other harm to their clients.
  • Employees who are injured while working in the studio may sustain injuries or lose their wages.

Business insurance requirements can be complicated, especially for exercise venues like dance studios. A dance studio may not require the same type of business insurance coverage. While some may choose to have more coverage for one-in-a lifetime accidents, others might feel that smaller claims are not worth the expense and opt for higher deductibles in order to reduce costs.

 

Tip Make sure you carefully review your insurance policies to ensure that you are fully covered in case of loss. Many dance instructors travel by their own vehicles to get to their studios and their students’ homes. They assume that their auto insurance will cover them. This is often not the case, as most personal auto policies exclude commercial driving.

 

What Dance Insurance Doesn’t Cover

Dance studio insurance is no exception to any insurance policy. There are many insurance companies that offer different policies, so make sure you check the exclusions before purchasing your policy. This will let you know what to expect from your coverage. Most claims that are denied are due to the studio owner not choosing the right coverage or policy. It saves you a lot of frustration and headaches by doing your research ahead of time.

There are some situations that insurance for dance studios doesn’t cover:

  • Illegal actions, including false promises and guarantees: A student telling another that “You will be on Broadway within a year” is a guarantee.
  • Privately labeled clothing and products: Selling supplements or dance clothes under your name requires a separate insurance policy. This policy must include a different risk category or a provider who can tailor it.
  • Programs for minors may be restricted or excluded
  • Other services and classes: Classes in martial arts, drama, yoga and crafts may not be included unless they are specifically added.
  • Student injury in class: Students are usually exempted from injuries to their bodies during dance, unless they have medical payments coverage.

 

Tip You may need to add classes such as yoga, Pilates or fitness to your studio. Pricing for additional coverage can vary depending on how often these classes are offered and the risk level.

 

To ensure you receive the correct quote and that your claims are covered, be as detailed as possible when filling out applications. You can always call your insurance provider to verify what is covered.

Types of Dance Instructor Insurance and Dance Studio Insurance

Protecting dance instructors from lawsuits and claims is essential. General liability claims are most common. However, workers’ compensation and professional liability claims can quickly cause financial ruin to small businesses that don’t have the right insurance policies.

The Most Popular Types of Dance Studio Insurance

Types of insurance It covers
BOP General liability and property damages claims
Professional Liability Policy Claims arising out of an instructor’s professional teaching or advice
Workers’ Compensation Insurance Studio employees are at risk of injury
Commercial Auto Insurance Auto accidents can cause damage to vehicles and increase liability
Accident Coverage Students who are injured during a performance may be eligible for a limited amount of health care, usually the deductible.

BOP

Every dance instructor should have a BOP policy. The policy covers two types of important coverage: property and general liability. In the event that a non-employee is hurt at the studio, a general insurance policy is required for a dance instructor. A BOP covers the cost of repairing or replacing damaged buildings and equipment.

A BOP would pay for student injuries or medical bills if they slip in the changing area. If the student is sued, your legal fees would be covered by the policy.

 

Tip To understand the definition of an insured individual, it is a good idea to go through your liability insurance policy. Although employees are generally covered, most policies don’t provide insurance coverage for independent contractors. Your instructors who are not employees would have to prove that they have their own insurance.

 

Professional Liability Policy

If a client is injured, there’s a chance that dance instructors could be sued. A professional liability policy will cover claims if an instructor recommends to a student a diet that leads to the student being admitted to the hospital.

A professional liability policy is a policy that covers you if your student sues you. Your legal defense is best served by your own policy, even if you have extended coverage.

Professional liability can cover losses resulting from misleading statements made by instructors about the services they offer. Professional liability coverage is also required when an instructor is sued because he or she gave poor advice about nutrition or for giving dangerous instructions.

Workers’ Compensation Insurance

Many dance studios have multiple instructors, support staff such as cleaners and receptionists. Employers in the United States are required to purchase workers’ comp to cover injuries sustained on the job.

These rules vary from one state to the next. Texas does not require coverage. Other states do not require that you purchase a policy until there are several employees. A policy will cover workers who are injured and pay for medical expenses as well as disability benefits. Workers’ compensation insurance covers any injuries that result from a studio worker falling.

Commercial Property Insurance

Commercial Property Insurance is required for dance instructors who own the building where they teach. It covers their building and contents like furniture and equipment. Commercial property insurance covers the cost of replacing or repairing damaged items due to fire, theft or other natural disasters.

Many people think that their property is covered under their general liability coverage. This is especially true if they see “property liability.” Property damage liability covers only damage to other people’s properties. Commercial property insurance is required if you want to protect your furniture and other property in the event that it is damaged or lost.

 

Tip If your studio is rented, you should make sure that your policy covers not only yourself but also the owners. Talk to an agent if you have any questions about the policy.

 

Commercial Auto Insurance

Commercial auto insurance is important if you are required to travel to other locations to instruct students or transport them in company vehicles. You can also add coverage to cover damage to your vehicle when you drive for work.

Instructors who travel to distant locations to teach require commercial auto coverage in the event of an accident. It is a good idea to speak to your agent about any possible lawsuits that could result from an accident at your dance studio if your car contains any advertising. Your business could be sued by people simply because they recognize the name of your company and believe it is worth more than you.

Accident Insurance & Medical Payments

Unless you are added to the rider, accident insurance and medical payments are usually excluded from insurance for dance studios. This coverage covers medical expenses for someone who is injured in an accident that was not their fault.

A dancer who falls from a jump and twists her ankle is an example of a covered medical expenses. This is not a professional liability claim. It is also not a slip-and fall that would be covered under general liability. If the student cannot afford their medical deductible, they may have to sue the studio.

Insurance providers for dance instructors

Insurance is different for different types of dance studios. Although you might be able to get all your insurance needs covered by national companies, you may need to use a smaller insurance provider for special circumstances.

Top Dance Instructor Insurance Providers

Provider Best for
The Hartford Local dance studios offering lessons and performing at events
CoverWallet Mixed-use dance studios for all sizes, with dance, art and exercise classes
Hiscox Dance instructors who are able to work in multiple studios and/or give private lessons.
  Studios that offer extensive after-school programs and have contracts for children’s programming
Sadler Sports & Recreation Insurance Owners of dance studios that also offer yoga and tumbling lessons

The Hartford

The Hartford offers policies nationwide for small businesses. The Hartford is known for its innovation and affordable policies.

For dance studios that offer lessons at local fairs and schools, Hartford is the best choice. Comprehensive coverage is available for dance instructors, which includes medical payments for students who are injured while teaching.

CoverWallet

CoverWallet works as an online broker to place business insurance for businesses across the country. To ensure that every small business owner has the right coverage at the right price, this provider works with over two dozen of the best-known insurance companies.

CoverWallet is the best option for a studio that offers many dance classes both in-studio and at other locations. They also have the facility to use for art, drama and exercise. CoverWallet can access many carriers so it can tailor policies to suit its clients.

Hiscox

Hiscox is a specialist in small business insurance and understands the risks that specific industries face, such as dance studios. Hiscox can offer customized coverage to clients in the dance studio sector because of this knowledge. Dance instructors and studio owners have the option to pay their annual premiums monthly, at no extra cost.

Hiscox is the best choice for dance instructors who want to protect their business interests or need to present certificates of insurance to studios that they contract with. Hiscox is the market leader in independent contractor insurance because they can price sole proprietor policies within a budget that suits all budgets.

All over the country

Nationwide offers personal insurance, including auto and home coverage. There are also extensive options for small-business insurance. Nationwide provides insurance for general liability and business interruption to help business owners protect their assets and property.

Nationwide is an excellent option for studio owners that offer child care programs at a primary studio, or at a third-party location such as a school. Nationwide offers comprehensive coverage that covers many risks associated with studio owners, including accidents on-site and off-site.

Sadler Sports & Recreation Insurance

Sadler Sport & Recreation Insurance provides insurance for higher-risk businesses that are more susceptible to injury. Bundled programs are offered that include general liability, business properties, and industry-specific inclusions like medical payments.

Sadler Sports & Recreation Insurance is the best choice for studios that offer more than dance lessons. They also need a policy that doesn’t exclude other programs such as yoga, tumbling or drama lessons. Sadler Sports & Recreation is a specialist provider and can create policies that are specifically tailored for dance, fitness, or sports operations.

Bottom line

Comprehensive insurance for dance instructors and studio owners is essential to ensure that they are protected against any loss. You’ll be covered if your employees get hurt, property gets damaged or you are sued.

Claims-made Policies vs Occurrence Liability

professional and general liability policies cover claims that are based on the time an incident occurs and the date a claim is filed. What triggers coverage is the difference. An occurrence policy, on the other hand, requires that coverage be in effect when an incident occurs.

What is a Claims-made policy?

A claims-made insurance policy provides coverage for liability protection to a company, but only if the claim was made after the policy was in effect. Retroactive coverage can be provided if the policy is still in force at the time of the claim or during its extended reporting period.

The Pros and Cons of Claims Made Liability Policies

PROS CONS
Retroactive coverage Confusing
Coverage gaps are prevented Not as often offered
Insurance provides peace of mind

Retroactive Dates for Claims-Made Policies

A claims-made policy’s retroactive date means that coverage begins at a date before the policy was paid for and taken into effect. A policy could be issued to a company that has been without insurance for six consecutive months. The policy will be effective if they receive it on July 1, 2021. The policy can be claims-made with a retroactive six-month date. This would cover claims that were made after January 1. This would mean that the company would have removed the coverage gap for incidents that occurred before the policy was bought.

Extended reporting periods for claims-made coverage

Professional liability policies allow you to extend the period during which you can file an claim. This is as long as the claim occurred while the policy was in effect. An accountant might have an errors and mistakes policy until he retires. If someone files a claim for work done before retirement, he can add an extended reporting period (ERP), to his policy. This would allow him to keep the coverage in effect for up to five years.

How policy limits based on claims are implemented

The policy’s claims-made coverage is based on the principle that the coverage will last longer than the policy term. The insured receives additional protection by retroactively covering events that occurred before the insurance company established a relationship. Extended reporting periods are also available for claims that can be filed after the policy term has ended or is not renewed.

Example of Commercial General Liability Coverage for Claims Made by Claims

A professional liability policy covers an architect from January 1, 2020 through December 31, 2020. This policy is claims-made and has a longer reporting period. He takes a break from work to deal with a family matter and does not renew his policy. A March 2021 client who hired him to design a house discovered that the design had a problem that caused a threshold to collapse. Although the architect no longer holds a valid insurance policy, the extended reporting period and a claim filed three months after the policy expired cover him for the loss.

What is Claims-made or Reported Coverage?

A claims-made and reported policy is different from an extended reporting policy. The claim must be made and reported to the insurance company while the policyholder still has a valid liability policy. It can be difficult to file a claim after a policy period ends.

What is an Occurrence policy?

An occurrence policy permits the policyholder to file a claim for loss no matter when it is made, as long as the loss occurred during the policy’s term. Because it does not limit the time that a claim can be filed, an occurrence policy can cost more than a claims-made one. It can occur one month, one or 10 years after the loss.

The Pros and Cons of Occurrence Based Liability Policies

PROS CONS
Flexible claim-making period More expensive
Some incidents are covered by indefinite protection There is no prepolicy protection
Straightforward policy

How the Occurrence Policy Limits Works

The general liability insurance limits apply only to the policy term. Any claim that was made after the expiration of the policy would be covered by the remaining coverage. Imagine that the prior policy had a $100,000 per-occurrence limit and an aggregate of $300,000. If you have not paid any claims during the policy term, the claim cannot exceed the per-occurrence limit. You would be out of luck if you have exhausted the aggregate.

Keep in mind that general liability insurance covers legal fees. Usually, defense costs are covered beyond the policy limits. You will need to verify this. They must be within acceptable limits or your per-occurrence value and aggregate value will get eaten by defense costs.

Example of Occurrence General Insurance Coverage

An occurrence type policy of general liability is available to a store owner. He has $100,000 per-occurrence limits and a $300,000. aggregate limit. His policy covers March 1, 2021, through February 28, 2021. A customer slips in his shop on January 20, 2021. A customer is taken to hospital with a fractured hip. There are complications after the surgery. The customer’s daughter files a claim for her on March 30, 2021. The claim does not apply to the current policy term, but to the prior term. The injury coverage will cover $100,000, plus any legal fees.

How to choose between Claims-made and Occurrence Liability insurance

It is important to know the differences between claims-made insurance and occurrence insurance so that you can choose the right policy for your company. The occurrence policy is more expensive, and therefore likely to be prohibitive if cost is a significant factor. The occurrence policy can be a good choice if you want coverage for any incident that occurred while your policy was in effect. A claims-made policy that has a retroactive period is a good option for newer businesses who might not have had general liability insurance.

Bottom line

It is crucial to know when and how your coverage will be effective before you buy general liability or professional liability insurance. There are many ways to get coverage before you purchase insurance, and also ways to protect yourself after your policy has ended. This will protect you financially from any claims that may arise even if there is no policy. Discuss your needs with your agent and determine which policy is right for you.

Six General Liability Limits Every Business Owner Needs to Know

Each commercial general insurance policy contains defined limits. These limits are listed on the declarations page and in the policy. It is crucial to understand these limits in order to ensure that you have sufficient coverage in all areas and that you are properly insured against risks.

Here are the six limits of liability in a general liability policy.

1. 1.General Aggregate

The insurance policy’s general aggregate limit determines the maximum amount an insurer will pay to cover claims for a given time. The general aggregate limit is applicable to:

  • Coverage A : Bodily Injury or Property Damage
  • Coverage A: Advertising and personal injury
  • Insurance C: Payments for medical conditions

A single large claim can be subject to the general aggregate limit, or a series smaller claims that add up to the limit. The insurance carrier will not pay any additional funds for claims if all claims within the policy term exceed the aggregate limit. Any resulting claims must be paid by the business.

This limit does NOT apply to claims arising out of products-completed operations hazards. These often have their own limit.

Example of General Aggregate

Imagine that your insurance policy has a $1 million limit for each occurrence and a $2,000,000 aggregate limit. Imagine you have three claims for $800,000. This is a total $2.4 million worth of claims. If your aggregate limit exceeds $2 million, then you are liable for $400,000 if the claimant wins their case.

2. 2.

An insurance company will only pay a certain amount for any given claim. This limit is called the per-occurrence cap and it is stated on your insurance policy’s declarations page. The per-occurrence limit often equals half the general aggregate limit.

If the aggregate limit is $2,000,000, then the per-occurrence limit could be as high as $1 million. Each insurance carrier and policy are different so make sure you understand the limits set by your policy. Sometimes, the per-occurrence limit may be equal to the aggregate limit. This limits the coverage that a policy will cover.

The claim amount will be reduced by the per-occurrence limit whenever there is a loss.

Example of Per Occurrence

Let’s say you have a policy that has a $1,000,000 per-occurrence limit and $2 million aggregate limit. The insurance company would pay $1 million for a $1.1 million claim. However, the business will likely be liable for any difference.

3. Operation to complete the product

Based on the liabilities arising from products or work completed, the product-completed operations limits determines how much will be paid. This coverage limit must be activated if the loss occurs outside of business operations. This coverage limit does not impact the general aggregate limit. It stands alone. It is possible to have claims that meet the general aggregate limit and a product-completed operation limit.

Example of Product-Completed Operations

Imagine a general contractor with a policy of general liability that covers $2 million in aggregate and $1 million for product-completed operation. The product-completed operation limit would pay $200,000 for injuries if a staircase the contractor constructed falls on the client. This claim would not affect the general aggregate limit of $2 million.

4. Personal & Advertising Injury

Personal and advertising injuries refer to things such as libel or defamation that you are accused of. This coverage does not have a general per-occurrence limit. The personal and advertising injury limits apply to each claimant, not to the entire occurrence. If more than one person is injured by an incident, they will each be eligible for compensation. It does however reduce the overall limit when a claim has been made.

Example of a Personal and Advertising Injury

Your policy covers general liability up to $2 million. There is also a $500,000. personal and advertising injury limits. You post something on Facebook about a competitor. The comment becomes viral. Your competitor loses customers due to the comment. The claim is false and your company is sued for $300,000. This claim is paid for by the personal and advertising injury limits, which pay to defend you. The aggregate limit drops by $300,000.

5. Premises Damage – You

Many business owners lease commercial space. They are required to have liability insurance. This coverage requirement often requires that you have at least $1 million of coverage per event. Each event counts towards the overall aggregate. This coverage requirement is not the same thing as the per-occurrence limit. However, these two can often be combined to make the total aggregate $1 million.

This coverage limit kicks in when damage is done. Fire damage is common, but vandalism, burst pipes and other perils that cause damage to the leased property are also covered.

Premises Damage – Rented to you Example

Let’s say you have a policy that covers $2 million in general aggregate and $1,000,000 for damage to your rental properties. A small fire breaks out when the microwave in the breakroom is set on fire. The fire department arrives to put out the flames.

Your contents are covered under a business property insurance policy. However, damage to walls, floors, and ceilings are covered by your coverage for damage to premises rented by you. The annual aggregate amount will be reduced to $1.7million if the amount exceeds $300,000.

6. 6.

This insurance is considered no fault and provides first aid and medical bills for anyone who sustains bodily injury on-premises. It covers reasonable expenses, subject to the policy’s medical expenses limit. The claim amount reduces the aggregate limit.

Example of Medical Expense

Let’s say you have a $2 million aggregate limit and a $1 million medical expense limit. A senior man falls and breaks his hip in your establishment. Your insurance will cover the cost of transportation and any medical bills that result from the fall, up to the policy limit of $1 million. The claim amount also reduces the aggregate limit.

Bottom line

You can make sure you are adequately protected against different risks by understanding when general insurance is required and the policy limits. To ensure that you have the correct amount of coverage, you should consult your agent. You can also increase coverage where you feel you are most exposed. Your business and you may be held responsible if a claim exceeds these limits.

Insurance for Staffing Agencies: Coverage, Costs & Providers

Insurance for staff agencies is a collection of policies that agency owners can buy to protect their assets. The policy covers the risks that many employment agencies are exposed to and pays for the associated costs. General liability is required by most agencies to protect third-party injuries or property damage. It costs between $400 and $1,000 each year.

Insurance costs for staffing agencies can be very different so it is a good idea to compare offers from multiple carriers. CoverWallet makes it easier to obtain quotes from multiple insurance companies. It takes less than five minutes for most owners to complete the application.

Visit CoverWallet

How staffing insurance works

Based on the business they operate, staffing agencies are exposed to different risks. Each agency owner must choose the right staffing insurance policy for his or her business. While most states require agencies to have workers’ compensation insurance for their employees, temp staffing agencies must also be covered for workers placed with clients.

General liability and commercial property insurance are required for all types of staffing agencies. Staffing agency owners are often able to get coverages in a Business Owner’s Policy (BOP) at a fraction of the cost of purchasing separate policies. This is because they have fewer risks for third-party suits and expensive property damage. BOPs for staffing agencies usually cost between $500 and $1,500 annually.

Insurance for Staffing Agencies

Insurance costs for staffing agencies depend on how many policies are purchased and what coverage is selected. The industries they work in are another important consideration. Tempo agencies that provide workers in construction or manufacturing will likely be more expensive than those that place clerical workers.

Insurance costs & deductibles for staffing agencies based on insurance type

 

Types of insurance Annual Premium Maximum Coverage The Average Deductible
General Liability Insurance 400 to 1,000 $1 Million per occurrence/ $2,000,000 aggregate *From $0 to $1,000
BOP From $500 to $1,500 Liability: $1 million / $2 million

Property Variables based on property values

From $200 to $500
Professional Liability Insurance $700 to $2,500 $1 Million per occurrence/ $2,000,000 aggregate *From $0 to $1,000
Workers’ Compensation From $200 to $2,000 Variables based on the industry and the insurance provider Variables based on state law

General liability insurance doesn’t usually have a deductible. However, business owners can request one to lower their premiums.

 

Insurers consider other factors when calculating the cost of staffing agency insurance. Other factors such as business characteristics and policy selection are also important.

Other factors that insurers take into consideration when setting premiums include:

  • Deductibles – A deductible is a sum that a policyholder is responsible to pay for in the event of a claim. A higher deductible will usually result in a lower premium.
  • Claims history Multiple claims can make a company look risky to an insurance company, so they tend to increase their costs accordingly.
  • Revenue:Insurers charge higher premieres to staff agencies with higher revenues because they may be more likely to face expensive lawsuits.
  • Employees: A higher staff number means more employee theft and injury, as well as increased opportunities for bad client interactions. Larger firms are more likely to have higher premiums on workers’ compensation, general liability, or commercial crime.

Workers’ Compensation Insurance for Staffing Companies

Nearly all staffing agencies require workers’ compensation insurance to protect their employees. Except in Texas, workers’ compensation insurance is mandatory to cover the medical bills and lost wages of injured employees. Temporary staffing agencies need to provide coverage for workers who are employed in other companies, which increases their staffing insurance costs.

Workers’ compensation insurance costs for staffing companies are determined based on the job risk of each employee, its payroll and claims history. Employers often pay higher rates for workers’ compensation when employees are in high-risk occupations. Workers’ compensation costs for residential builders can range from $2.82 to $35.95 for $100 worth of payroll, while those for clerical workers are often 8 cents or $1.48 per $100 worth of payroll.

 

Tip – Safety training is a great way to keep your employees safe, reduce worker’s comp claims, and lower the cost of staffing insurance. Although they may hire workers from other companies, these temps are still staffing agency employees. The agency owner is responsible therefore for their safety.

 

Different types of insurance for staffing companies

Staffing agencies are exposed to risks. They need staffing insurance in order to protect their assets against lawsuits and other accidents. General liability, workers’ compensation, and commercial property insurance cover the most common risks to staffing agencies. To cover additional risks such as employee crime and negligence, agencies might need other staffing policies.

The Most Popular Types of Staffing Insurance Policies

Types of insurance It covers
General Liability Insurance Nonemployees have made allegations of bodily injury, property damage and reputational damage
Commercial Property Insurance Repair and replacement costs of business-owned property including real estate, equipment and fixtures
Workers’ Compensation Insurance Employees who are injured or suffer from work-related illness and injury may lose their wages and have to pay medical bills.
Commercial Crime Insurance Criminal activities can result in the loss of money, securities, or other property.
Professional Liability Insurance Client claims of professional negligence can result in legal fees

General Liability Insurance

General Liability Insurance covers staffing agencies by covering third-party claims for property damage, injury to the body, and advertising injuries such as defamation. General liability usually covers your legal fees and the medical bills of the injured party if your company is accused.

Here are some examples of general liability claims:

  • Client accuses you of damaging their copier while on temporary assignment
  • An electrician is accidentally tripped by a delivery driver in your reception area
  • Your social media manager sent a tweet that was defamatory to a competitor and he sued.

These claims are typically covered by standard general liability policies, regardless of whether you or your employees cause them. Because temporary staffing agencies employ agency workers, their general liability coverage also covers workers placed in other businesses.

Commercial Property Insurance

Insurance for commercial property covers damage to agency property that is caused by fire, theft or vandalism. Your policy covers your agency’s office space, equipment, furniture and fixtures up until the coverage limit. This excludes your deductible. Agent owners can choose to insure only their office contents with commercial property insurance.

Staffing agencies have very low property exposures. This combined with the low risk of general liability lawsuits means that most agencies are eligible for a BOP.

Workers’ Compensation Insurance

Most states require workers’ compensation insurance to be purchased by staffing companies in order to pay for employees’ medical bills and lost earnings if they are injured or suffer from work-related illness. Business owners may be required to buy coverage from the state fund or purchase it through their state laws when they hire employees. Some states require coverage even for one employee.

Only staffing agencies that hire permanent workers need to have workers’ compensation insurance. Temporary staffing agencies require coverage for both their in-house workers and the workers they place with clients.

 

Because agency-paid temporary workers are not independent contractors, they don’t meet the IRS requirements. They are paid per hour and cannot manage their work situations.

 

Commercial Crime Insurance

Commercial Crime Insurance Covers financial and property loss due to illegal acts, including forgery and computer fraud. Temporary staffing agencies require endorsements for clients’ items, as most policies only cover the property and funds of the policyholder.

These are some situations that could trigger insurance for crime insurance:

  • An accused temporary worker was charged with stealing inventory from a retailer client
  • Your bookkeeper committing check fraud
  • Theft of money from your agency by a burglar

Most commercial property policies do not cover theft of money or securities. They also don’t cover dishonest employees. This makes commercial crime insurance a valuable policy for any company, but particularly for temporary staffing agencies.

Professional Liability Insurance

The errors & omissions insurance also known as professional liability insurance, protects your staffing agency from lawsuits arising out of your professional services. Professional liability insurance covers your legal costs if you are accused by a client of sending an unqualified candidate.

The following are some other examples of professional liability insurance that may be covered:

  • Mistakes: Sending applicants to the wrong interview could cost them a job
  • Omissions Failure to conduct background checks
  • False statements: Inflating a worker’s qualifications in order to get them a job

For staffing agencies, some insurers offer both professional and general liability coverage under one policy. Although this may seem like a cost-saving strategy, owners should verify that the coverage is adequate.

Additional Insurance Policies for Staffing Agency Insurance

These are the five insurance policies that staffing agencies require. Many owners work in supply or operations that require additional insurance.

Cyber liability insurance, commercial auto coverage, and computer and media coverage are just a few of the other types of staffing insurance policies that agency owners might need.

Cyber Liability Insurance

Cyber liability insurance covers the costs of data breaches and cyberattacks such as client notification and credit monitoring. Many agencies are exposed to cyber liability, even though any employee could accidentally reply to a phishing message. The greatest risk may be for information technology staffing agencies.

Commercial Auto Insurance

Staffing agencies that have business-owned vehicles will likely require commercial automobile insurance. While most states require that business owners have at least the minimum level of liability coverage in order to protect themselves against injuries and damage caused by their employees, owners can purchase coverage that covers them for any injuries and damages. For vehicles they rent, borrow or hire for business, they can get both owned and hired auto liability insurance.

Computers & Media Coverage

Computers and Media coverage (also known as electronic data processing coverage) helps to pay for the restoration or replacement of digital data lost by your agency’s network or computers due to certain perils such as theft, vandalism and malware. Some policies cover hardware and software repairs. These items are not covered by commercial property policies.

Insurance providers for staffing agencies

It can be challenging to get insurance for staffing agencies, especially if you have temporary workers and need insurance in different locations. Agency owners often have to look for specialty insurance companies or find brokers that have access to multiple carriers in order to get coverage.

Top Staffing Agency Insurance Providers

 

Provider Best for
CoverWallet Owners of staffing agencies who wish to compare quotes before purchasing insurance
Bankers Insurance Agent owners who are looking for a combination of professional and general liability policies
Philadelphia Insurance Companies Employer practices liability insurance (EPLI), is required for staffing agencies that have employees.
Intego Owners of staffing agencies who wish to reduce the stress associated with workers’ compensation audits
World Wide Specialty Programs Agents who are looking for premium discounts or free legal advices

The following are some of the most reputable insurance providers for staffing firms:

 

CoverWallet

CoverWallet can provide coverage to employment placement agencies and small business insurance. To help small businesses find the right coverage, the company partners with top-rated insurance carriers such as CNA, Chubb and Liberty Mutual.

When they are looking for staffing insurance, agency owners should apply with CoverWallet to get staffing coverage. CoverWallet allows you to easily get multiple quotes from quality insurers with one application. This transmits your business information directly to all carriers. It takes less than five minutes and can often return multiple quotes.

Bankers Insurance

Bankers Insurance can provide temporary staffing agency coverage. Bankers Insurance agents are often able to negotiate lower prices for clients, in addition to providing quotes from multiple carriers.

Bankers Insurance offers a unique option that allows you to combine both general and professional coverage into one policy. Bankers Insurance is ideal for agencies that want to manage one insurer, one premium, and one policy for both of these essential coverages.

Philadelphia Insurance Companies

Philadelphia Insurance Companies is a national financial carrier that has been creating insurance products for niche markets since more than 55 years. They have developed a flexible package to support temporary staffing agencies after years of experience working with difficult-to-insure companies.

The PHLY temporary staffing agency insurance program includes high general liability limits, up to $3 million coverage for the term of the policy. PHLY is a good choice for business owners looking to cover employment practices liability. The policy covers workers who are placed with clients. However, the insured can choose to use their own counsel and/or the carrier’s counsel.

AP Intego

AP Intego offers a full range of business insurance policies. However, their specialty is workers’ compensation insurance. You can pay your workers’ compensation premium as you go. This plan is based on your actual monthly salary and not an estimate for the entire year.

AP Intego’s payment program makes it an ideal company for staffing agencies that want to pay monthly premiums accurately. This will ensure they don’t have unexpected bills when it comes to their workers compensation audit. Your payroll service coordinates with the company’s technology to automatically withdraw premium payments and determine the correct premium.

World Wide Specialty Programs

World Wide Specialty Programs, an insurance company that is solely focused on the staffing industry, can provide customized solutions for all types and sizes of staffing agencies. Zurich, an industry leader with over 140 years of experience in creating insurance programs for niche markets, provides company coverage.

Agent owners may consider World Wide Specialty Programs because of the company’s experience. But, a bigger benefit is the possibility for discounts through partner organizations. American Staffing Association members can receive premium discounts, and all World Wide EPLI policyholders get a free consultation with Jackson Lewis, LLP.

Tips for Obtaining Staffing Agency Insurance

Staffing agency insurance is vital for your business’ success. However, it’s not as easy as choosing policies and paying the premium. You can take steps to ensure you are getting quality coverage at an affordable price.

An agent who knows the industry is a good choice

Agents who are familiar with the staffing industry should be able to assist agency owners. Although staffing agencies are generally exposed to a set of unique risks, some may also be subject to additional risks due to their particular operations. A staffing agency agent who has industry experience will be able to identify these risks and recommend the right staffing insurance for your business.

Compare Quotes from Multiple Carriers

Insurance is the second-highest overhead cost for staffing agencies after payroll. Agency owners need to be able to find affordable coverage while still protecting their business. The best way to do this is to compare multiple quotes. An insurance broker can not only help you find a good rate, but it will also help you to navigate the differences among your options.

Correctly Classify Your Staffing Agency

Many people use the terms employment agency and staffing agency interchangeably. Employment agencies place permanent workers for insurance. This distinction is critical to make when you apply for insurance.

Bottom line

Staffing agencies can be of any size and offer services for almost all industries. It is not easy to find the right insurance provider and funding for staffing agencies. To ensure that their agency has the right coverage, they must identify their risks and work with professionals who are familiar with the industry. An insurance agent who is knowledgeable and helpful can help owners find the best practices and create safety programs, which will reduce their insurance costs.

Church Insurance: Cost, Coverage & Top Companies

Like any other business, churches need to protect their assets. However, it’s not as easy as asking an agent to provide church insurance. You will need multiple policies that are tailored to your risk. In the event of an injury, general liability is required by most churches. The average cost of this policy is $500 to $1500 per year.

Online brokers such as CoverWallet make insurance easy for churches, mosques and other religious groups. CoverWallet will match you with a carrier that offers the right coverage for your organization.

Visit CoverWallet

Top Insurance Companies

Provider Best for
CoverWallet Religious groups that wish to quickly get covered but still compare offers
State Farm Churches who need comprehensive property insurance to cover equipment breakdown and sewer backup
Brotherhood Mutual Christian churches who want overseas mission coverage for liability, property and medical purposes
Church Mutual Insurance To reduce the number of claims, worship centers may need assistance with safety training.
Gateway Specialty Insurance Multiple options are available for religious organizations who want to tailor their coverage

The risks faced by churches, synagogues and mosques as well as other religious organisations are unique. We focused on specialty carriers because they have the best reputation for covering these types of risks. This is because they have extensive industry knowledge and can usually offer adequate coverage at an affordable price.

CoverWallet

There are common risks within the industry such as older buildings and high-value artifacts. Also, congregations have high expectations. This makes it difficult to find church insurance. We recommend that you submit an application with an online broker CoverWallet. It is simple to complete and can often result in multiple offers that you can compare in a matter of minutes. The applicant can choose the best option for them.

State Farm

State Farm provides broad coverages to religious organizations, especially when it comes down to church property insurance. Churches are also covered for common exposures like equipment breakdown and sewer backups. You can also get optional coverage for data breaches and cemetery liability.

Brotherhood Mutual

Brotherhood Mutual is in the business of protecting Christian churches for over 100 years. The company’s 350 independent agents from 47 states are trained to assess ministry structures, liabilities, risks, and find the right coverage for churches. Brotherhood Mutual offers insurance for overseas missions that provides coverage for liability lawsuits and ministry-owned property and vehicles. It also covers medical payments for injured workers and political evacuations.

Church Mutual Insurance

Church Mutual has more insured religious institutions than any other American insurance company and offers many property- and liability insurance policies that are specifically tailored for common church exposures. Church Mutual’s most distinctive offering is its safety library. It includes everything from background checks and water sensors to abuse awareness training through its MinistrySafe and CM Sensors Program. These resources are great for churches who want to reduce claims and control costs.

Gateway Specialty Insurance

Gateway Specialty Insurance, a Berkshire Hathaway brokerage, partners with 17 insurance companies to offer quality insurance for niche markets. Gateway Specialty has relationships with specialty insurance companies, so Gateway Specialty can customize your church insurance according to your needs. You can also add coverage for equipment breakdown and business income to the standard insurance policies for churches.

Who needs church insurance?

We use the term “church insurance” in a broad sense. Church insurance can be used to cover religious organisations of any kind, such as synagogues, temples, mosques, and temples. Some non-traditional practices may also be eligible for insurance. Because they are often in contact with people and have property, religious organisations need insurance to protect their assets.

These are some less-common spiritual practices that might require insurance.

  • Travel preacher: Preachers that travel between places will likely need the following policies, as well as inland marine insurance which covers property while in transit.
  • Home churches. Homeowners insurance typically covers an informal prayer group, but churches that receive donations or are linked to a larger organisation will need church insurance.
  • Yoga and meditation, tai-chi and meditation: These spiritual practices will likely require business insurance. Learn more about yoga and our insurance guide .

How insurance works for churches

Multiple policies can be used to insure churches and other religious organisations. You determine the risks of your organization and choose policies that will cover them. A business owner’s policy (BOP), which covers third-party lawsuits as well as damage to church property, is the most common and typically costs between $1,000 and $2,600 annually.

Although BOPs are important for churches, they’re not the only type of insurance religious organizations require. The exposures your temple or church has will determine which type of insurance they need. Exposure is how much potential loss your organization faces. This can often be determined by your operations.

Let’s take, for example, the fact that your clergy offers spiritual counseling. While this may be an important aspect of your ministry, it could also expose your organization to negligence claims. You can purchase professional liability insurance for your defense costs.

Church Insurance Costs

Insurance costs for religious institutions vary widely because no two religious institutions are the same. Small churches can often save money by choosing an insurer that specializes on religious organizations, or a broker who offers church insurance programs. Brokers can often get affordable coverage for small organizations by grouping together many churches.

Church Insurance Costs and Deductibles according to Coverage Type

 

Type of coverage Maximum Coverage Annual Premium Cost Deductible
General Liability Insurance $1 million/$2 million From $500 to $1,500 From $0 to $500
BOP $1 million/$2 million From $200 to $1,000 $10,000**
Pastoral Professional Liability Insurance $1 million/$2 million From $800 to $1000 From $500 to $1,000
D&O Insurance $1 million/$2 million From $500 to $1,000 From $500 to $1,000
Abuse & Molestation Insurance $300,000. From $100 to $300 From $0 to $500

*General liability coverage does not usually include a deductible. To keep your costs down, however, you might be able request one.

 

**Property Deductible for BOP

This table displays the average premiums for churches that have fewer than 300 members. There are two limits for general liability, pastoral liability and D&O insurance. The first limit is the amount that insurers will pay for a single claim, while the second is the total amount paid for all claims during the policy term. Because abuse and molestation coverage is often added to general liability or professional liability, it is listed as a “sublimit”.

Your premium for liability coverages will be affected by the size of your congregation.

  • Your board size: More board members means you need more insurance, as it increases your chance of being sued.
  • Your claims history When setting your premium, insurers consider how many claims you have made in the past. Insurance waivers and other risk management methods can help reduce claims.
  • The services that you offer: Both individual and group counseling can increase your premium. However, other ministries such as food pantries and daycares can also raise your premium.
  • You policy terms: Increasing your premium by asking for higher limits. In contrast, a lower deductible will usually lower your premium.
  • Your property’s value: A synagogue that owns valuable artifacts will pay more for commercial property coverage than one that rents only a storefront.

The Most Popular Types of Church Insurance

Types of insurance What it covers
General Liability Insurance Third-party claims for bodily injury and property damage
Commercial Property Insurance Assured value of business-owned properties
Pastoral Professional Liability Insurance Professional negligence allegations
Directors & Officers Insurance When a board member is sued for actions taken for the organization, it will be their legal defense
Commercial Auto Insurance Accidents in church-owned vehicles can lead to high costs
Workers’ Compensation Insurance Loss of wages and medical expenses for employees resulting from work-related injuries and illnesses
Abuse & Molestation Insurance Civil lawsuits: Sexual misconduct allegations

General Liability Insurance

Third-party property damage and bodily injury insurance covers these claims. People who are not employees of your organization are called third parties. Congregants are the most common example, but any person who visits your church, such as delivery people or event attendees, can be considered a third party.

If:

  • Your broken stairs are taken by a churchgoer
  • In a rented worship area, your candles can light a fire.
  • Inadvertently, a volunteer drops the laptop of a council member

Volunteers can pose a challenge for insurance companies. Your general liability covers most accidents that volunteers cause. This means your insurance pays for any injuries or property damage caused by your volunteer. But, any injuries that your volunteer sustains are not covered. You can add volunteer coverage to workers’ compensation in some states.

 

Tip: Volunteers are listed on general liability policies as being insured. This means that they are covered for the injuries they cause, but not the ones they sustain. Some states allow you to include volunteer coverage as riders on workers’ compensation policies. Talk to your agent to discuss a volunteer accident medical expenses policy.

 

Commercial Property Insurance

Church-owned buildings and their contents are covered by commercial property insurance. This includes furnishings and fixtures as well as equipment. Property insurance covers these items if they are damaged by a covered event. This is less than your deductible so you can get the items fixed.

Commercial property insurance typically covers damage due to:

  • Fire
  • Vandalism
  • Theft
  • Hail
  • Windstorms
  • Burst pipes

There may be additional property exposures for churches, such as landscaping, valuable art, or outdoor signs. These are usually covered by commercial property insurance. However, you might want to place the right value on them so that you have enough coverage.

 

Tip: Churches should add fine arts endorsements for high-value artifacts to their property insurance. Most commercial property policies do not provide replacement value coverage. They also often exclude potential threats artifacts are susceptible to such as temperature and fungus.

 

Pastoral Professional Liability Insurance

Pastoral professional liability insurance covers clergy against claims of negligence in pastoral care. You can get one-on-one or small-group counseling, as well as guidance during religious services.

You might be required to take professional liability, for example, if you:

  • Couple claims that their divorce was caused by your inability to offer spiritual guidance
  • One congregant claims that the sermon’s advice caused them to make bad investments
  • A prayer group member claims that your words have caused emotional harm.

Pastoral professional liability insurance covers you for these types of events. It pays for your legal defense including attorney’s fees and court costs.

D&O Insurance

D&O Insurance protects your board members’ legal defense in the event they are sued for actions they have taken on behalf of your church. These accusations could include mismanagement, unfair hiring practices and defamation. They can be made by current or former employees, vendors working with your church, donors, and even members.

Your board’s actions are not covered by other policies, leaving members open to lawsuits. This can make it difficult to sit on a board. Church leaders purchase D&O to promote membership. Policies protect the assets of the church because they decrease the chance that board members will sue the church if things go wrong. D&O insurance is a good idea since board members are not covered by the general or professional liability policies of churches. If your board is sued for their board duties, they will have to pay all legal fees.

Churches can get commercial auto insurance

Church-owned cars, trucks and vans are covered by Commercial auto coverage Businesses must have at least some liability coverage in order to cover any injuries they cause in an accident. You can also add coverages such as:

  • Medical payments Covers your medical expenses, for you and your passenger, regardless of fault
  • Collision: Insures your church’s vehicles that are damaged by an accident
  • Uninsured/underinsured motorists: Covers medical expenses and property damage caused by a driver who either doesn’t have insurance or doesn’t have enough insurance
  • Comprehensive: Covers repairs to church-owned vehicles that are damaged in an accident.
  • Roadside Assistance: Insures roadside assistance such as tows
  • Non-owned and rented auto: Insures you against any damage to cars that you rent, lease, or hire.

Even though your vehicles cross state boundaries, commercial car insurance covers them. However, standard policies may not cover you if you drive while on mission trips. Ask your agent for information about the options available to you regarding vehicles that your church has or uses in other countries.

Workers’ Compensation Insurance

Workers’ Compensation Insurance A state-mandated insurance policy, which covers employees’ medical bills and partial lost wages following an injury or illness on the job, is an Workers’ Compensation insurance . While clergy are exempted in some states, most policies cover:

  • Traumatic injuries such as falling off a ladder decorating the synagogue
  • Repetitive strain injuries like carpal tunnel
  • Lung disease and occupational diseases such as lung disease can result from asbestos exposure

Two issues are important for religious organizations to be aware of when it comes to workers’ compensation:

  • Workers from overseas: This type of employee is not usually covered by workers’ comp insurance. Therefore, churches with foreign ministries might need to provide workers’ compensation for their overseas staff.
  • Volunteers Although laws may vary by state, most policies do not include volunteers. You might ask your agent for volunteer accident medical insurance.

Abuse & Molestation Insurance For Churches

Abuse and molestation insurance protects against accusations of church staff members engaging in sexual misconduct. Although these policies do not cover the criminal side, they can protect your church by covering the costs of a civil case.

Some policies covering abuse and molestation cover a civil trial, regardless of whether the allegations are true. Some policies may only cover the church that is the employer, but not the accused perpetrator. Other policies may also require you to reimburse legal fees if the perpetrator’s guilt is proven. There are many options for coverage. It is important to ask questions before purchasing a policy.

Although religious organizations and spiritual practices are not nonprofits, they still need insurance.

Bottom line

Like any business, religious organizations are subject to risks. Because of the high expectations of laypeople, they may be more likely to be sued. Many churches wouldn’t be able to pay for a costly lawsuit. This makes insurance essential for synagogues and churches.

Here are 5 types of general liability claims and how to avoid them

You need to be ready for everything as a business owner. You could be held responsible for an accident that might result in you being sued, which could cost thousands of dollars. You would have to pay the costs of these claims out of pocket if you didn’t have general liability insurance. A general liability policy can help you to cover these expenses. You should do everything you can to minimize risk and avoid any accidents.

Claims for General Liability Insurance are typical

You can be sued for general negligence for many reasons. Find out what risks you face and how to avoid them.

These are five examples of general negligence claims that you can avoid.

1. Slip-and-Fall Claims

Slip-and fall claims account for about 10% to all small business insurance claims. The average claim costs around $20,000. A slip-and fall could be an instance of patron walking around your establishment and slipping on a slippery or wet floor. The patron then falls and suffers serious injuries that require medical attention.

How to Avoid Slip and Fall Claims

Make sure everyone is aware of hazards to avoid slip-and fall claims. To help people find a safe path, use signs and cones that indicate wet floors to direct them. To reduce slippage in high-traffic areas, make sure you have nonslip floor rugs pads or tape. Workers should be alert to any potential slippery floors and take immediate action to prevent them from becoming worse. General liability insurance often covers slip-and-fall claims.

2. Third-party property damage claims

Third-party property damages are when someone else’s property is accidentally damaged by your business activities. Imagine a contractor moving a wheelbarrow along a client’s driveway. Then he loses control and the wheelbarrow collides against the client’s vehicle, causing a large dent.

How to avoid Third-party Property Damage Claims

Property damage claims can be avoided by paying attention to your surroundings while working on client property. You must ensure that there is enough space for you to work, without putting the client’s property at risk.

Your clients should always bring their belongings to your business. You can give clients access to a locker, or another safe place where they can store their belongings if they have to leave.

3. Personal & Advertising Injuries Claims

Advertising claims and personal injury are when someone’s reputation has been damaged by your actions. Usually, this is due to what you write or print in advertisements. One common example is when your competitor claims that you are a “crook” and makes a public statement about it. Your competitor could sue you if he loses business or his reputation has been damaged.

How to Avoid Advertising and Personal Injury Claims

It is possible to avoid personal and advertising injuries claims if you pay attention to what your employees and you say. It’s okay to make comparisons between your competitors and their facts, but it is best not to call them names or make disparaging remarks about them. If in doubt, avoid saying anything. Also, make sure that you understand how employees speak to customers. You should teach them how to talk about your competitors.

4. Claims for Products-completed Operations

Products-completed operations coverage kicks into effect if a product has a defect or other problem that causes injury or property damage. This coverage will not protect your business from recalls.

How to Avoid Claims of Products-Completed Operations

Set a high standard for excellence for all products to avoid product-completed operations claims. You must ensure that products are properly tested for safety and take customer feedback seriously. You might be alerted to a problem by someone else, even if no claim is filed. This can provide valuable insight into a potential danger you did not see.

5. 5.

Your general liability policy will provide incidental coverage for liquor-related claims if you don’t manufacture, sell, distribute, or produce alcohol. An employee hosting a happy hour for employees to celebrate reaching sales goals could lead to a claim. You could be held responsible if one of your employees drinks excessively and causes injury to another person while driving home.

How to Avoid Liquor Liability Claims

You will want to ensure that alcohol is prohibited at company events and on company property in order to avoid any claims for liquor liability. If you decide to hold an event with alcohol, ensure that you monitor who is drinking. You can offer ride-sharing to ensure that no one is driving under the influence. The event organizers should limit the amount of alcohol that is permitted.

What your General Liability Insurance Insurer pays for in a Claim

Your general liability policy covers the cost of a claim. It also pays any legal and investigation fees. If a person files slip-and fall claim for $30,000 in medical bills, lost wages, and other expenses, the policy will cover that amount – unless the insurer suspects fraud. In this case, an investigation may be conducted by insurance carriers to determine if the claim is fraudulent.

The amount paid to the insurance company for legal and investigation fees may vary depending on the policy. If you have only $100,000 of liability coverage, this can quickly increase your policy payout caps. To determine if you have sufficient liability coverage, review how your carrier calculates your claim value towards your per-occurrence or aggregate total.

3 Claims That Your General Liability Insurance Doesn’t Cover

third party claims are not covered by general liability. general liability doesn’t cover certain situations. These include:

  1. Professional liability claims Damages that result from errors in your work or workmanship are covered under errors and omissions insurance (E&O), not general liability.
  2. Workers’ Compensation claims: Employees who are hurt at work are covered by workers’ comp insurance, as required by law.
  3. Commercial auto insurance claims: If you are involved in an auto accident while on the job, your commercial auto policy will cover the liability and not general liability.

Bottom line

Avoiding claims and accidents is the best way for your company to save money on general liability insurance. You can’t avoid every bad event, so you need a comprehensive general insurance policy to protect your company and its reputation.

Food Vendor Insurance: Coverage, Providers & Cost

Food vendor insurance is the type of coverage that food vendors need in order to protect their business from financial loss due to liability claims. General liability and commercial property are the most popular policies for food vendors. Costs for food vendor insurance range from $300 to $1,300 per year and as low as $60 for one-day events. With more coverage, larger operations and more equipment, costs will rise.

Different food vendors have different food liability insurance requirements. For food vendors, an online broker such as CoverWallet is a smart way to find the right policy at the right price. You can receive a quote free of charge from a carrier who understands your business needs and risks.

Visit CoverWallet

What does Food Vendor Insurance cover?

Food vendor insurance covers mobile food vendors, single-event vendors, and concessionaires. Each business operates in different locations and can be exposed to different risks. A weekly farmers’ market has different risks than a concession stand at a concert venue. Vendors need to be aware of the risks they are exposed so they can choose policies that protect them.

Food vendor liability insurance, for example, must cover both normal business risks such as slip-and fall general liabilities and risks specific to food vendors. Foodborne diseases and equipment failure are two examples of unique risks.

 

Tip: Festivals and fairs can have differing insurance requirements. Before you begin looking for insurance, make sure to inquire about the event’s coverage limits and duration.

 

Who needs food liability insurance?

Food vendor liability insurance is required for any business selling food products to the public at non-traditional locations. Concession stands, street fairs, and public sidewalks are all possible locations. These are some of the most common small businesses that purchase food vendor liability insurance:

  • Food trucks
  • Food trailers
  • Food carts
  • Caterers
  • Concessionaires
  • Private chefs and personal chefs

For any event, even one-day, food vendor insurance is usually required. Restaurants that regularly work at community events or set up tents at food festival events will need to have a policy endorsement or special endorsement. This will cover all the risk associated with events and mobile operations. Because of the higher risk of foodborne diseases, some restaurant insurance policies do not allow event coverage. Different venues have different insurance requirements so you need to know ahead of time if your venue requires additional insurance.

Mobile Food Vendor Insurance Prices

For most small businesses, food vendor insurance costs range from $300 to $1300 per annum. The vendor may only need general liability insurance. However, it is cheaper than those who require additional coverage (e.g. commercial property) or those who want a owner’s policy (BOP). which bundles liability and property coverages.

If you own a food cart, for example, you may only require basic coverage to protect your risks. This includes a BOP for general and commercial liability. You may need foodtruck insurance if you own a food truck with multiple employees and a large vehicle. This would include workers’ compensation and commercial auto insurance.

Insurance costs for food vendors

Policy Premium Cost (Annually). Maximum Coverage Deductible
General Liability From $500 to $1,200 $1 Million $0
BOP From $600 to $1.500 $1 Million $500
Auto From $1,300 to 3,500 $1 Million $500
Inland Marine $300 to $1,000 Depends on the value of the business property N/A
Equipment Breakdown Endorsement From $200 to $800 $50,000 $250 to $2,000
Workers’ Complement From $1,000 to $2,700 $1 Million $0

General liability insurance costs about $100 per day for coverage that covers food vendors for one event such as a food festival. These premiums can vary depending on the provider, state, size of the business, and certain coverages. Your coverage options, such as the limits and the deductibles, are some of the factors that will determine your food vendor insurance cost.

Insurance companies use factors to calculate food vendor insurance costs.

  • Operation: Your business’s nature can impact your risk, such as whether you have a food stand or a mobile food cart.
  • Location A food vendor at a high-crime corner will charge a different rate to a concessionaire who is positioned in a building that has security like a concert hall.
  • Value business property: The higher the premium, the more business assets you insure.
  • Employer payroll: Workers’ Compensation premiums are determined by payroll costs and type of work performed.
  • Coverage amount Although increasing the liability limits or the coverage of assets can increase premiums, this is not a direct correlation. Double coverage doesn’t mean double cost.
  • Deductibles An increase in deductibles can reduce premium costs. Before you finalize your policy, ensure that you have the funds to pay a deductible.
  • Claims history Your premiums could be higher if you have had previous claims because you are more likely to make another claim.

Tip: Event organizers require a certificate of insurance (COI). This certifies that you have the correct amount of coverage, and also lists the event as an additional insured. Each COI costs around $25, while adding someone as an insured endorsement can cost up to $100. Some insurers offer COIs for free and you can download them quickly from their sites.

Food Vendor Insurance Providers

Provider Best for
CoverWallet Catering and food vendors can be found at a range of events.
Progressive Commercial Food trucks equipped with machinery and equipment attached to the trucks
Food Liability Insurance Program Multiple vendors who need certificates of insurance for multiple events
Hiscox Microbusinesses and sole proprietors can operate a wide range of food vendor operations.
Nationwide For occasional and part-time food sellers, short-term, targeted coverage

Many national small-business insurance companies are specialized in specific types of food vendors, so they can offer slightly higher pricing and better protection. Food vendors should compare policies from at least three insurance companies before deciding on a policy. This allows them to compare the coverage they get for the amount they pay in premiums.

CoverWallet

CoverWallet can be used by food vendors who are involved in a wide range of events. CoverWallet is an online insurance broker that allows them to search for top-rated national carriers to cover a restaurant that hosts a street fair or a food truck that expands to corporate and family events. CoverWallet offers food vendor insurance policies that cover general liability, commercial property, workers’ compensation, and other options.

Progressive Commercial

Progressive Commercial is a good option for food truck owners who have expensive food preparation equipment permanently attached to their vehicles. This carrier is nationally recognized as a reliable provider of auto insurance, which gives them an advantage in offering the right policies for food truck owners, such as ice cream trucks. Progressive Advantage Business Program offers business owners discounts of 10% to 15% when they bundle multiple policies.

FLIP

FLIP can be a great option for food businesses that work at multiple events throughout the calendar year. FLIP offers vendors the opportunity to get free certificates of liability insurance. FLIP often provides coverage the same day. FLIP’s insurance policies are underwritten by The Great American Insurance Group. They start at $245 for food coverage.

Hiscox

Hiscox can be a great partner for sole proprietors or microbusinesses in a wide range of food vendors including food and drink carts, mobile food service, concessions, and street food vendors. Hiscox is a specialist in general liability for food vendors. Monthly costs start at $30 and you can get up to $2,000,000 in coverage online. Before you receive the final quote, you can easily adjust your coverage and deductible. It is also easier to get a quote online than to speak with an agent by phone.

All over the country

Nationwide provides great coverage for part-time food vendors that might only have a few booths at events each year. Food vendors can tailor their coverage for short-term policies to be used away from long-term leased or owned premises with this national carrier. Nationwide offers the ability to choose the coverage level and duration, as well as separate policies to cover losses to inventory, stock, or property.

Common Types Of Food Vendor Insurance

You will need some type of insurance, regardless if you are a mobile food vendor and/or a food truck owner. General liability is the most popular type of insurance for food vendors. To protect their vehicles and assets, some vendors may also require commercial property or commercial auto insurance.

Commercial General Liability

Commercial general insurance provides primary insurance coverage for food sellers. It is also known as food vendor liability insurance. This coverage is essential when working with the public as it covers all costs and legal fees if you are accused of causing injury to an employee.

General liability insurance usually covers:

  • Third-party injuries : You can burn someone’s hand if you accidentally spill hot coffee while giving it to them.
  • Foodborne illness: If your customer reports food poisoning after consuming your undercooked product.
  • Third-party Property Damage: If your doll rolls into someone’s vehicle in the event parking lot.

Commercial Property Insurance

You wouldn’t be able to run your food business without your equipment and cart. Commercial property insurance is essential coverage for food vendors. This policy covers any property that is owned by your business and can be repaired or replaced if it is damaged by the covered perils.

  • Vandalism and theft: After someone steals your supplies, or takes them away from you, you must replace them.
  • Water damage or fire: After a fire, pipe burst, or other disaster, you will need to replace all your inventory, supplies, and carts.
  • Food spoilage When your cart’s motor stops working, it can’t keep your products cool. Your food will spoil and you won’t be able to sell it.

A BOP is a cost-effective option for small businesses that combines protections for general liability and commercial property. If your business is affected by a covered loss, you can also get business interruption coverage.

Commercial Auto Insurance

Commercial auto insurance protects third-party claims for bodily injury and property damage in the event you are found liable for an accident. You can also get first-party coverages such as protection for damage to business vehicles that is caused by uninsured and underinsured drivers. Personal auto insurance doesn’t cover vehicles that are used solely for business purposes.

For food trucks, commercial auto coverage is essential. Auto insurance is essential to protect your investment when your biggest asset and greatest risk exposure are tied to a commercial vehicle.

Inland Marine Insurance

Mobile food vendors don’t usually have a physical location. They need inland marine coverage to protect their valuable assets. This includes equipment, tools, supplies and inventory while they move from one place to the next. Commercial property insurance does not cover items beyond the address on the policy.

Insurance for Equipment Failure

Equipment breakdown insurance covers the cost of repairing or replacing equipment and machinery that are essential to daily operations in the event of an internal malfunction. Inland marine covers the generator while in transit. Equipment breakdown replaces the generator when the generator overheats during a summer festival.

Workers’ Compensation Insurance

Workers’ Compensation Insurance offers benefits to employees in the case of work-related illnesses or injuries. If you have employees, most states require that you have this coverage. This coverage is not required for small food vendors that are solely owned and operated by themselves. Workers’ compensation is offered by some insurance companies for single events lasting between one and ten days.

Bottom line

Small business owners in the food sector need to ensure that they have the right insurance coverage. This goes beyond protecting them from liability claims and property damage. Insurance is essential for many food vendors. Food vendors need sufficient liability coverage to be able to get permits, licenses, and contracts.

Products-completed Operation Coverage: What it Is and Who Needs It

Products-completed operation coverage is part of a general insurance policy. It covers injuries and property damage that are caused by products or business operations. This coverage is vital for service providers and contractors who manufacture, distribute or sell goods.

general liability policy covers products-completed operations and costs around $400 to $600 annually for small businesses. A standalone policy will usually cost a business $1 to $2 for every $1,000 of revenue, and more for high-risk products.

What is Product-completed Operation Coverage?

Products-completed operation coverage is a subset in general liability insurance. It covers your business if third parties are injured or suffer property damage due to your product. Businesses can choose to have coverage for general liability through their general insurance policy or through a standalone policy.

When there is a loss from products-completed hazards, claims may cover medical costs, repairs costs, and legal fees. Although most claims are covered, there may be an endorsement that excludes certain types of claims. It is a good idea to carefully read your policy to fully understand what is covered.

Products-completed Operations vs. Standalone Product Liability insurance

Small business owners generally find that the coverage for products-completed operations in their general liability is sufficient. Some businesses, like manufacturers and product designers, may face greater product liability risks. They may require a separate product liability insurance.

This product liability insurance is intended to address this increased demand and is usually sold through specialty insurers. Product liability insurance can be purchased separately and works the same as general liability. It covers your legal defense in the event that your product or service causes injury or damage. However, it does not cover damages that occur outside your business premises.

Products liability policies may have greater limits than general liability policies. Manufacturers can pay $1 to $2 per 1,000 product for policies that cover products that are less risky. A retailer or distributor might pay between $1,500 and $2,500 annually for product liability insurance. High-risk companies can pay significantly more, paying between $6,000 and $12,000 annually.

Because product liability suits often involve multiple plaintiffs and incidents, manufacturers frequently purchase product liability insurance. These costs can quickly add up and manufacturers could be held liable for large amounts if they did not have general liability coverage with products-completed operation coverage.

How products-completed operations coverage works

A general liability policy that covers products-completed operations typically works on an occurrence basis. This means that the policy must be in force when injury or property damage occur. The occurrence that triggers coverage must occur away from business premises. These criteria could cause confusion for policyholders when it comes time to file a claim.

These situations are not typical for products-completed operations coverage.

  • Claims that occur after you have dropped your coverage: Let’s say a contractor finishes a job and then cancels their General Liability one month later. Their insurer won’t cover any claim for injuries sustained by a client if the date of injury is after the cancellation.
  • Claims that occur on your business premises: If a retailer sells a product to a customer who has been injured by it, an insurer will likely deny the retailer’s claim. The policy’s general liability may be activated to cover third-party injuries or property damage.

These situations allow the business owner to still be sued but will not pay their legal fees or court costs.

The business owner can be sued for many years after they have sold the product, even after they close. Extended completed-operations coverage endorsement can help with this. It covers claims relating to products that were sold within the policy’s terms for up to 10 year after expiration.

What products-completed operations are covered?

There is always a chance that a product could cause harm to other people if it is distributed by a business. This is called a products-completed operation hazard. Products-completed operations coverage covers small business owners who are claiming that they have been injured or damaged by a product of their business. Products-completed operations coverage usually covers defects due to accidents or intentional behavior.

Some claims are covered under the products-completed operations coverage.

  • Unintentional contamination: E.coli can end up in pharmaceuticals, for example.
  • Mistakes in labeling: An example is a label that misidentifies a product as lead-free.
  • Unintentional defects: This could be a defect in a battery that causes spontaneous combustion while being charged.
  • Malicious Tampering: An example of this is a hostile worker on an assembly line interfering in ingredients

A business owner may be sued for product liability if their products-completed operation coverage kicks in. This covers their legal fees, court costs and any other legal expenses. The policy may include legal fees as part of the total liability policy. To ensure that you are fully informed about legal fees, check your policy.

What Products-Completed Operations Doesn’t Cover

Four standard exclusions apply to coverage for products-completed operations. Exclusions refer to situations that your insurance policy doesn’t cover, and are clearly stated in the contract.

These are the four exclusions that are standard in coverage for completed operations:

  • Product damage: The product-completed operations coverage does not cover property that is not your product. Imagine that you sell appliances and that a customer gets a broken dishwasher. Because no other property was damaged, your insurer will not cover the claim. Your insurer may cover flooding if the hose breaks.
  • Damage to your finished work: Products completed operations coverage does not cover damage to your finished work. Imagine a carpenter building a staircase that falls under the client’s weight. The client may only sue for damages to the stairway. The insurance company will not pay because it is the carpenter’s responsibility. The client may still be able to sue for any other damage that the broken staircase caused.

This exclusion does not apply to subcontractors. The insurer will usually pay the claim if the carpenter hired a subcontractor for the construction of the stairway.

  • Damage to defective products: Claims arising from property that is defective because it contains your product or work are also exempt. If a defective widget in a manufacturer’s laptop causes it to explode, the insurer won’t likely pay for damages or injuries. However, they will cover any claims for property damage and injury that result from an exploding laptop.
  • Recall expenses Products-completed operations coverage does not cover recall costs. A business will need product recall insurance to fully protect itself. This covers the costs of getting defective products off the shelves.

Limits on Products-completed Operations

General liability insurance covers products-completed operations. This coverage has an aggregate limit which is separate from the general aggregate limits. An aggregate limit is the amount insurers pay to cover claims during a policy term. While most claims are counted against the aggregate limit, products-completed operation claims will only affect the aggregate limit for products-completed. You could have a general liability case that exceeds the policy aggregate limit, but also have a product-completed operations claim against its limit.

Your overall premium can be reduced by selecting a lower limit for your products-completed operations aggregate limit. This could mean that you won’t have enough coverage in the event you are taken to court. It is important to weigh the cost of a product liability suit against what you are willing to pay.

Example of Products-completed Operation Coverage

Imagine a retailer selling toys for children. Its primary concern as a retailer is its customers so it has chosen a general liability policy with products-completed operations coverage. The retailer is covered for injuries to customers that happen in its store as well as injuries it causes outside the store.

When a customer claims that their child was hurt by a defective product, the retailer’s products-completed operation coverage might seem redundant. In the case, the customer’s lawyer will likely name all those involved in bringing the toy to market. This includes the retailer. The defense can be covered by the products-completed operations coverage of the retailer.

This situation could be different for the manufacturer. The manufacturer is more likely to be held liable for defective products. It may also face multiple lawsuits for the same defective product. Each lawsuit reduces its aggregate limit for products-completed operations and its per-occurrence limit under its general liability policy.

A standalone policy reduces the likelihood of a toy manufacturer exceeding its coverage limit. This could be a risk if it has only product liability coverage.

Who needs products-completed operations coverage?

A business with a finished product must ensure that it has sufficient products-completed operations coverage. A general liability policy covers a business up to $100,000, but businesses with greater risk will need more coverage. You need some product-completed operations coverage if a consumer walks away with a product in their hands. This is because there is a risk that the product could cause injury or property damage.

Bottom line

Small business owners are subject to product liability. Standard general liability insurance covers products-completed operations. High-risk individuals may require specialty insurance such as a separate product liability policy. To determine the right coverage limits for their business, owners must assess their risk.

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